Tough Calls: An Ethical Process for Handling Layoffs

El-Ghoroury_ethics and layoffs December 17, 2020 By: Nabil El-Ghoroury, CAE

Layoffs may be unavoidable, but they should not be unprincipled. When you carry out a staff downsizing with fairness and as much transparency as possible, you’ll preserve your remaining team’s cohesion and position your organization for a better future.

In this year’s COVID-19 environment, many senior association executives faced difficult decisions about how to protect their organization’s financial health during the pandemic. With conferences and other activities cancelled and revenues declining, some organizations have been forced to reduce the size of their staff. Unfortunately, more layoffs may be necessary as the economy continues to feel the ongoing effects of the crisis.

Layoffs are always painful, but they shouldn’t be unfair or unprincipled. So how do you engage in the layoff process in an ethical manner? While there are important legal requirements to consider, certain areas require your special focus from an ethics point of view.

Lay the Groundwork With Your Employees

A major risk of a layoff is that it can destroy team cohesiveness. How can you minimize this impact?

One of the best inoculants to protect against the destructive nature of a staff downsizing is the involvement of employees in decision making. Obviously, you may not be able to discuss the specifics of any layoffs with all staff. But engaging with your team to brainstorm the future direction and needs of the association has many benefits. Front-line managers may have insights into places to trim the budget more effectively than those in the executive suite. Managers may also have insight into which positions could be cut with the least impact on programs and revenue. Staff in general may have ideas on improving efficiencies and generating new revenue.  

If you have engaged in this process with employees and base staffing decisions on your association’s future direction and needs, employees will better understand the business case for the layoffs.

Consider the Optics

How you handle the layoffs will have an ongoing impact on employees who remain, so you need to consider how they will view the process. Perceptions matter.

One method to mitigate feelings of unfairness among staff is to show that the pain has been spread around. If employees believe you were “playing favorites”—that decisions about layoffs were unfair or not based on business needs—the negative impact on future productivity and cohesiveness will be felt long into the future. If employees perceive that certain staff members or departments were unfairly spared or targeted, resentments could linger.

It pays to remember that staff cohesiveness is based on relationships. The treatment of one employee reverberates to others.

Carefully consider the process for implementing the layoffs and ensure that it is as humane as possible. Is there a way for employees working virtually to say goodbye? Are supervisors made aware of the decision to let go an employee who reports to them before the employee is told? It pays to remember that staff cohesiveness is based on relationships. The treatment of one employee reverberates to others.

Several additional areas can take on symbolic importance during a downsizing:

  • To the extent possible, take into consideration diversity issues beyond what is legally required. Not only can resentments build from the perception, however mistaken, that certain groups were adversely affected, but you can undo important groundwork you have laid for DEI initiatives.
  • Another critical issue heavy with symbolism is executive compensation. The announcement of a voluntary pay cut by executives can go a long way toward engendering the sense that “we’re all in this together.”
  • Finally, if your layoffs will be followed by new hiring, be especially careful to show that the new hires are based on needs that could not be filled by those leaving the association.

During an association layoff, an important additional audience to consider is your members. The messaging for members should explain the business necessity for the layoffs as well as the steps taken to be fair and minimize pain. 

Many members have special relationships with individual employees or specific departments, and these often define their connection to the association. They will be looking to see if the layoffs were balanced and will notice whether employees leaving the association were treated fairly and equitably. In addition, members may interpret the choices you make about which departments to downsize as an expression of their own value to the association. Be ready to counter any misperceptions among your membership.  

Treat Departing Employees Well

Take care of those you let go to the greatest extent you can. In determining what to offer them upon exit, consider the likely economics of their situation. Structure the layoffs to position the departing employees to take advantage of any special COVID-related programs that might help them. Provide severance packages that are based on their likely needs, including more generous healthcare benefits than legally required, job training (if appropriate), and career counseling or coaching.

Association executives have a responsibility to protect the organization they lead and ensure its long-term viability. This may require tough decisions, including whether to furlough or lay off employees. While those decisions may be unavoidable in these uncertain economic times, how you carry them out can make a meaningful difference in sustaining the morale of employees who remain. Handling layoffs in a principled manner can help you maintain cohesiveness of your staff and help your association survive this challenging storm.

Nabil El-Ghoroury, CAE

Nabil El-Ghoroury, Ph.D., CAE, is executive director of the California Association of Marriage and Family Therapists and chair of the 2020-2021 ASAE Ethics Committee.